A major controversy has emerged in Pakistan’s Senate cabinet committee as no government ministry has stepped forward to take ownership of the proposed Virtual Assets Ordinance, aimed at regulating cryptocurrency and digital assets. The bill seeks to address the sector’s long-standing legal vacuum.
Under the draft ordinance, all cryptocurrency exchanges and virtual asset service providers in Pakistan would be required to obtain licenses. Entities operating without approval could face up to seven years’ imprisonment and fines reaching Rs100 million, raising concerns over enforcement.
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Senator Saleem Mandviwalla proposed removing punitive clauses, arguing that harsh penalties could create implementation challenges. However, PML-N sources rejected the suggestion, warning that removing deterrents could encourage unlicensed operations and increase corruption risks in the sector.
A key component of the ordinance is the establishment of a Shariah Advisory Committee to review and certify crypto products in compliance with Islamic principles, promoting financial inclusion while respecting religious and cultural frameworks across the country.
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The draft legislation also mandates segregation of customer funds from company assets and requires licensed entities to maintain a proof-of-reserves system. Compliance with Federal Board of Revenue (FBR) reporting and tax withholding rules is also required to safeguard public money.
Officials noted that Pakistan has lagged behind regional competitors in regulating digital assets. The ordinance, valid for three months, is seen as a crucial step to encourage technological innovation while protecting investors from fraud and financial exploitation.